3.3 - Determining Economic Life Based on Profit
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Practice Questions
Test your understanding with targeted questions
What formula is used to calculate depreciation?
💡 Hint: Think about how much the asset loses value over time.
How do you calculate the book value at the end of the first year?
💡 Hint: You want to reduce the purchase price by the depreciation amount.
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Interactive Quizzes
Quick quizzes to reinforce your learning
What is the formula for calculating the book value at the end of the first year?
💡 Hint: Consider what happens to the asset's value over time.
True or False: The economic life of a machine is the period during which it is less costly to maintain than to replace.
💡 Hint: Focus on the relationship between cost and lifespan.
2 more questions available
Challenge Problems
Push your limits with advanced challenges
If a loader with a purchase price of 30 lakh has a depreciation rate of 30%, calculate its book value after 2 years.
💡 Hint: Remember to recalculate the book value after each year based on the current value.
Using the maximum profit approach, if the estimated annual profit of a current loader is 7,90,000, and the proposed loader offers a maximum average annual profit of 8,50,000, should the company replace the loader?
💡 Hint: Compare profits to assess if replacement is needed.
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